Settlement Payout Options Explained

Resolving a personal injury case and getting a settlement is a major achievement. Before you can receive the funds, however, you will need to choose how you’d like them to be distributed to you. There are two primary options: lump sum or structured settlement, or a combination of the two (hybrid). Discussing your individual needs with a San Antonio personal injury lawyer can help you make an informed decision.

Lump Sum Settlement

When you accept a settlement from an insurance provider, you will sign a release of liability waiver dismissing the defendant from any further financial responsibility for your injuries and losses. While signing, you will designate how you would like to get paid: a lump sum, a structured settlement or a hybrid of the two.

A lump sum means you will receive the entire settlement all at once, in a single large payment. The insurance company will cut you a check for the full amount and mail it to you in one payment of the balance owed. This means there are no delays in when you will receive the funds. However, you will not receive any additional funds in the future.

Structured Settlement

A structured settlement breaks down the total settlement into multiple payments sent over time. A timeline of payments can be created by the plaintiff to match his or her individual needs, such as monthly or bimonthly installments.

Structured settlements can allow for more peace of mind about the future, as they offer financial security over time. A structured settlement offers flexibility, as the plaintiff can choose his or her payment schedule. This is a more common choice for people with long-term injuries, permanent disabilities, ongoing care needs or injured children with future costs to consider.

Hybrid

Another option is a hybrid payment plan, or a combination of both types. With this type of settlement, a plaintiff can choose a certain amount of the settlement to receive right away, such as a large chunk to pay off outstanding debts, and then receive the remaining balance in installments over time.

What to Consider When Deciding How You’d Like to Get Paid

Both settlement disbursement options have unique pros and cons. The lump sum agreement might be the right choice for you if you have large bills or medical debts you’d like to pay off all at once. A lump sum gives you greater flexibility in what you can do with the money, such as investing it or making a large purchase.

However, if you have serious injuries with ongoing or long-term related expenses and aren’t confident in your ability to make the money last, a structured settlement might be the better choice. This will guarantee that you and your family will continue to receive payments for the duration of your medical care or recovery. In addition, a structured settlement may increase in value over time due to interest.

How to Organize Your Personal Injury Settlement

A personal injury case does not end with the approval of a settlement. The claimant still needs to decide how they would like to receive the settlement and organize their payout in the best possible way based on their specific needs.

Settlements are also divided up to pay off certain debts prior to going to the plaintiff. This may include medical liens, attorney’s fees and taxes. Only certain portions of a settlement are taxed, so it’s important to have an attorney organize the settlement correctly to avoid over-taxation.

Once all relevant debts and fees have been deducted from the settlement, the remaining balance will be the plaintiff’s to receive however they see fit. For personalized advice regarding the right payment structure for you, contact The Law Offices of Maloney & Campolo for a free case consultation in Texas.